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When the Apogee Company had all its operations- Rate Please [#permalink]

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15 Jun 2012, 03:11

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AWA Question:

The following appeared in a memorandum from the business department of the Apogee Company:

“When the Apogee Company had all its operations in one location, it was more profitable than it is today. Therefore, the Apogee Company should close down its field offices and conduct all its operations from a single location. Such centralization would improve profitability by cutting costs and helping the company maintains better supervision of all employees.”

Discuss how well reasoned you find this argument. In your discussion be sure to analyze the line of reasoning and the use of evidence in the argument. For example, you may need to consider what questionable assumptions underlie the thinking and what alternative explanations or counterexamples might weaken the conclusion. You can also discuss what sort of evidence would strengthen or refute the argument, what changes in the argument would make it more logically sound, and what, if anything, would help you better evaluate its conclusion.

Essay:

The argument claimed by business department of the Apogee Company in a memorandum that centralization of the company and closing down its field offices is necessary to maximize the company’s profits and minimize the costs. They have wrongly used the centralization concept. Can a company that has expanded through a wide network of field offices can suddenly shut down just because it has failed to raise profits. Even though their claim may well have a merit, the business department presents a poorly and weak reasoned argument, based on several questionable premises and assumptions, and based solely on the evidence that it offers, we cannot accept their argument as valid.

The primary issue with the business department’s reasoning lies in their unsubstantiated premises. Some field offices may be profitable and some may be in loss making. The ones which are profitable cannot be shut down. Also instead of closing down the offices, it is better to analyze the problems with respect to internal and external. Internal problems such as corrupt or rigid management, inefficient workers, large attrition rate or sudden hiring rate, difficult working conditions. External problems such as any force majeure incidents such as flood, drought, earthquake, etc, poor customer’s response or competitor’s good hold on the market. Depending on the quantum of problem, it is better to list down the effective strategy with a set target date for the particular loss making office.

The secondary issue in the argument lies in the cost-benefit analysis. The business department has failed to explicitly mention that whether proper pros and cons were considered in the cost sheet. Initially, the cost benefit may seem to be high. Local field offices would have been much effective in handling local customers and vendors. If centralization of the company is adopted, then the employers have to travel for longer distances for business meetings, for providing services to the customers or for inspection at manufacturer’s works .Certainly, the cost will be higher and thus minimizing the profits as expected initially. The business development’s premises, the basis for their argument, lack any legitimate evidentiary support and render their conclusion as unacceptable.

The tertiary issue in the argument is high probability of getting a bad publicity. Simply closing the field offices for the process of cost-cutting will garner negative publicity in the market. The benefit will go to its competitors. Hence, the company will fall into a more vicious circle of reduced profit and bad reputation in the market. Hence, the business development weaken their argument by making assumptions and failing to provide explication of the links between increasing profits and closing down the field offices for centralization, that the department assume to be exists.

While the business department has several key issues in its argument’s premises and assumptions, that is not to say the entire argument is without base. The departments’ main objective was to identify the main area of loss in the company. If centralization was the only solution, the business department could have given more statistical data. It could have explained that centralized management would take the ultimatum decisions and could have provided an efficient business strategy. They could have suggested ways to handle the public attention for the closure of local field offices.

In sum, the business development’s illogical argument is based on unsupported premises and unsubstantiated assumptions that render their conclusion as invalid. They have overlooked the above addressed points. If the business development truly hopes to change its readers’ mind on the issue, they would have to largely restructure their argument, fix the flaws in their logic, clearly explicate their assumptions, and provide evidentiary support. Without, all these things, their poorly reasoned argument will likely convince few people.

Re: When the Apogee Company had all its operations- Rate Please [#permalink]

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18 Jul 2014, 10:48

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Re: When the Apogee Company had all its operations- Rate Please [#permalink]

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01 Sep 2016, 13:05

Hello from the GMAT Club VerbalBot!

Thanks to another GMAT Club member, I have just discovered this valuable topic, yet it had no discussion for over a year. I am now bumping it up - doing my job. I think you may find it valuable (esp those replies with Kudos).

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Re: When the Apogee Company had all its operations- Rate Please
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01 Sep 2016, 13:05